The Telecom Regulatory Authority of India (TRAI) on Tuesday recommended reducing the licence fee of telecom operators to six per cent from the current eight per cent.
The TRAI’s proposal is in line with what the telecom operators have been seeking since the government started selling spectrum through auction. The licence fee was introduced when operators were getting spectrum on subscriber-linked criteria without any upfront fee. TRAI has said that the component of USO levy should be reduced from the present 5 per cent to 3 per cent of annual revenue for all licences with effect from April 1, 2015.
Beneficial for growth “With this reduction, the applicable uniform rate of licence fee would become 6 per cent (from the present 8 per cent) of gross revenue,” it said. “It is the Authority’s expectation that the following set of recommendations will set the tone for the growth of the telecom sector in the medium to long term, and minimise disputes and contentions that have had the effect of dampening investor confidence in the past,” TRAI said. The TRAI recommendations will, however, have to be ratified by the Department of Telecom (DoT) before telecom companies can take benefit. That looks difficult going by the current mood of the Government to maximise revenues. “The Regulator has also reiterated that the income from non-telecom activities and other income should be excluded while computing adjusted gross revenue (AGR) which is a very welcome step,” Hemant Joshi, Partner, Deloitte Haskins & Sells. Telecom companies have increased their scope of activities in the recent past thereby earning income, which is not related to telecom activities, and also earn other income from investment etc. Operators are currently paying license fees on these other income also, he said. These recommendations would help in reducing the license fee and spectrum charges outgo of the telcos if the same is approved by the DoT, he added.